Industry Report: China Hotel Investment & Asset Management Outlook

Hotel Investment & Asset Management in China

The coronavirus outbreak in 2020 has been a severe challenge for the hotel industry in China, putting the risk management capability of each operating hotel to the test. While from the perspective of hotel investment and asset management, which are more strategic and forward-thinking than day-to-day operation, the industry will recover from the downturn eventually, the impact of this outbreak will force investors to reconsider their strategic planning in hotel investment and in asset management. It’s crucial for investors to take a positive stand and refocus on the essentials of hotel investment: to evaluate hotel assets from a corporate development standpoint, and to build a more rational evaluation and development plan for the investment, management, and exit strategies for hotel assets.

This is the first survey conducted by Horwath HTL regarding hotel investment and asset management related issues. It is a summary of the results of research based on 226 questionnaires from state-owned enterprises, real estate development companies, asset management companies, funds, investment banks, and others.

In this report, Horwath HTL compiled 15 key trends for the hotel investment and asset management industry in China based on an in-depth analysis of hotel positioning, city hierarchy and location of new-build hotels and existing assets.

Sample Distribution by Company Type

35%  State-owned Enterprise
35%  Real Estate Developer
12%  Hotel Operator
10%  Others
5%    Asset Management Company
3%    Funds/ Investment Bank

The Key Focus Of Existing Asset Renovation

67%  Upscale
63%  Upper Midscale
36%  Luxury
28%  Midscale
16%    Economy

Conclusion

Market supply and investment/acquisition cost are the core factors that affect hotel investment returns. To achieve better performance on ROI, fine tuning asset management has increasingly become the focus of asset owners. Cost Control and Driving Revenue have become the top priorities of asset management. Facing the negative impact from the Coronavirus outbreak and the declining role of the real estate industry in economic development, refined hotel asset management will gradually be put into practice. In the future, hotel investment and existing asset renovation will be more driven by efficient space utilization that strive to maximize asset value as well as business performance.